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Press release from GlobeNewswire (a Nasdaq OMX company)

Clearwire Reports First Quarter 2012 Results

Thursday, April 26, 2012

Clearwire Reports First Quarter 2012 Results13:01 EDT Thursday, April 26, 2012First Quarter 2012 Revenue of $322.6 Million, Up 36% Year Over Year From First Quarter 2011 Revenue of $236.8 Million First Quarter 2012 Total Ending Subscribers of 11.0 Million Up 80% Year Over Year from 6.1 Million Aggregate Wholesale 4G Usage More than Doubled; Increased 134% Year Over Year in First Quarter 2012Average Smartphone 4G Usage Increased 53% Year Over Year in First Quarter 2012Initiates LTE Build; Identifies Initial 5,000 Sites to Offer High Capacity 4G Offload Services in 31 Top Tier Cities Including New York, Los Angeles, San Francisco, Chicago and Seattle BELLEVUE, Wash., April 26, 2012 (GLOBE NEWSWIRE) -- Clearwire Corporation (Nasdaq:CLWR), a leading provider of 4G wireless broadband services in the U.S., today reported its financial and operating results for first quarter 2012. "The compelling growth of wireless data is driving the need for more spectrum capacity and attracting new entrants to the market," said Erik Prusch, President and CEO of Clearwire. "Clearwire's high capacity LTE Advanced-ready network will sit at the intersection of these two trends. "Operationally, we are focused on managing our business efficiently and building our LTE network with an eye towards driving further growth in 2013 and beyond. We are also very pleased with the progress in our retail business, and our wholesale business continues to expand with new partners Cricket, FreedomPop and Simplexity, as well as the launch of NetZero's 4G products. We look forward to working with our existing wholesale partners and continuing our dialog with additional potential partners to deliver the value Clearwire's 4G services can provide to their own mobile broadband efforts." First quarter 2012 revenue was $322.6 million, a 36% increase over first quarter 2011 revenue of $236.8 million. Wholesale revenue in first quarter 2012 was $117.8 million, a year over year increase of 93% over first quarter 2011 wholesale revenue of $60.9 million and a 28% sequential decrease from fourth quarter 2011 wholesale revenue of $164.1 million, reflecting the new WiMAX terms of the November 2011 Sprint wholesale agreement (the new Sprint agreement) which took effect in 2012. First quarter 2012 retail revenue and other revenue was $204.8 million, a year over year increase of 16% from $175.9 million in first quarter 2011. First quarter 2012 retail ARPU was $46.83, essentially flat compared to $46.80 in first quarter 2011. Clearwire ended first quarter 2012 with approximately 11.0 million total subscribers, up 80% from 6.1 million subscribers in first quarter 2011. The subscriber base consists of 1.3 million retail subscribers and 9.7 million wholesale subscribers. During first quarter 2012, Clearwire added 586,000 total net new subscribers, reflecting 537,000 net new wholesale subscribers and 49,000 net new retail subscribers during the period. Wholesale subscribers consist primarily of Sprint 3G/4G smartphone customers. First quarter 2012 aggregate network usage by wholesale customers increased 134% compared to first quarter 2011, driven primarily by growth in aggregate smartphone usage, which increased 271% over the same period. Average 4G smartphone usage during the quarter increased 53% year over year. Retail cost per gross addition (CPGA) was $242 in first quarter 2012 compared to $295 in first quarter 2011. The year over year improvement is primarily due to lower sales and marketing expenses associated with our recently launched no-contract retail offering as well as a lower retail cost structure resulting from our cost cutting initiatives in 2011. Retail churn was 3.7% in first quarter 2012, up from 3.3% in first quarter 2011. Adjusted EBITDA in first quarter 2012 was a loss of $(38.2) million, representing a $172.1 million improvement when compared to first quarter 2011 Adjusted EBITDA loss of $(210.3) million.  For the first time, Clearwire's operating activities provided net cash of $65.7 million in first quarter 2012. This milestone is primarily attributable to the company receiving payments during the period from Sprint related to both fourth quarter 2011 wholesale usage and the initial payment under the terms of the new Sprint agreement, the sum of which exceeded first quarter 2012 Sprint wholesale revenue, as well as continued strong expense management. First quarter 2012 reported net loss from continuing operations attributable to Clearwire was $(182.1) million, or $(0.40) per basic share. Including the effects of discontinued operations, first quarter 2012 reported net loss attributable to Clearwire was $(181.8) million, or $(0.40) per basic share.    At the end of first quarter 2012, Clearwire operated networks in the U.S. covering areas where approximately 134 million people reside, including approximately 132 million people in markets where we provide 4G services. TDD-LTE Network Plan & 2012 Capital Expenditures Outlook Clearwire has commenced the first phase of its LTE overlay network build of up to 8,000 sites in high demand "hot zones" in major urban centers as part of the company's strategy to provide capacity offload services to other mobile broadband service providers, including Sprint and Cricket. The initial phase of the build includes 5,000 sites in 31 top tier markets including New York, San Francisco, Los Angeles, Chicago and Seattle. The company expects these markets to come on air over the course of the first half of 2013. In conjunction with the finalization of the build plan for the initial 5,000 sites, Clearwire now expects capital expenditures in 2012 will amount to approximately $350 million to $400 million, $100 million to $150 million lower than previous expectations of $450 million to $550 million. Most of the spend is anticipated to occur in the second half of the year.Results of Continuing Operations   Cost of goods and services and network costs (COGS) in first quarter 2012 increased 10% to $263.8 million compared to $240.1 million for first quarter 2011. These amounts include non-cash charges for network equipment reserves and other write-downs of $56.4 million and $6.5 million in first quarters 2012 and 2011, respectively, and other non-cash network-related charges of $26.6 million and $34.7 million in first quarters 2012 and 2011, respectively. The increase in non-cash charges for network equipment reserves in first quarter 2012 was primarily due to increased reserves for equipment inventory which Clearwire no longer expects to utilize as part our future build plan or for sparing purposes based on our current LTE network design. Excluding non-cash expenses, COGS decreased 9% year over year primarily due to a decrease in the number of tower leases resulting from cost savings actions taken in 2011. Selling, general and administrative (SG&A) expense in first quarter 2012 decreased 34% to $142.7 million compared to $214.9 million for first quarter 2011. The decrease is primarily attributable to actions taken in conjunction with Clearwire's cost cutting initiative in 2011 including lower employee-related expenses resulting from headcount reductions and outsourcing of the customer care function, reduced marketing spend, as well as decreased selling commission expense associated with our recently introduced no-contract product offering.  In addition to $56.4 million and $2.3 million of network equipment reserves and other write-downs included in COGS and SG&A, respectively, total non-cash write-downs of $139.1 million in first quarter 2012 includes $80.4 million of loss from abandonment of network and other assets primarily related to write-downs of uncompleted network development projects that were abandoned in the quarter as they do not coincide with Clearwire's LTE network build plans. First quarter 2012 capital expenditures of $23.0 million related primarily to ongoing maintenance of Clearwire's mobile WiMAX network, and was essentially flat as compared to $23.1 million in fourth quarter 2011, but substantially less than $130.1 million capital expenditures in first quarter 2011, which was primarily related to the build out of the mobile WiMAX network. The company ended first quarter 2012 with cash and investments of approximately $1.4 billion invested primarily in U.S. Treasury securities.CLEARWIRE CORPORATIONSUMMARY OF FINANCIAL DATA FROM CONTINUING OPERATIONS(In thousands)(Unaudited)              Three months ended  ActualPro forma (1)Actual  March 31,December 31,September 30,March 31,March 31,  20122011201120112011             REVENUES:           Retail revenue  $ 204,810  $ 197,640  $ 194,789  $ 175,241  $ 175,241 Wholesale revenue  117,821  164,082  137,162  76,974  60,895 Other revenue  8  148  226  672  672 Total revenues  322,639  361,870  332,177  252,887  236,808 OPERATING EXPENSES:           Cost of goods and services and network costs (exclusive of items shown separately below)  263,790  293,999  282,459  240,145  240,145 Selling, general and administrative expense  142,655  128,502  176,469  214,864  214,864 Depreciation and amortization  177,973  169,962  165,560  182,474  182,474 Spectrum lease expense  79,708  79,556  77,696  74,821  74,821 Loss from abandonment of network and other assets  80,400  123,000  29,129  171,862  171,862 Total operating expenses  744,526  795,019  731,313  884,166  884,166 OPERATING LOSS  (421,887)  (433,149)  (399,136)  (631,279)  (647,358)             LESS NON-CASH ITEMS:           Non-cash expenses  66,664  156,308  119,321  76,243  76,243 Non-cash write-downs  139,056  129,358  67,810  178,325  178,325 Depreciation and amortization  177,973  169,962  165,560  182,474  182,474 Total non-cash items  383,693  455,628  352,691  437,042  437,042 Adjusted EBITDA  $ (38,194)  $ 22,479  $ (46,445)  $ (194,237)  $ (210,316) Adjusted EBITDA margin (12)% 6 % (14)% (77)% (89)%             KEY OPERATING METRICS (k for '000's, MM for '000,000's)           Total net subscriber additions  586k   873k   1,893k   1,761k   1,761k  Wholesale  537k   904k   1,858k   1,610k   1,610k  Retail  49k   (31)k   35k   151k   151k  Total subscribers  11,000k   10,414k   9,541k   6,105k   6,105k  Wholesale(2)  9,659k   9,122k   8,219k   4,856k   4,856k  Retail  1,341k   1,292k   1,322k   1,249k   1,249k  Retail ARPU $46.83 $46.69 $47.05 $46.80 $46.80 Churn           Wholesale 3.0 % 2.9 % 1.5 % 1.3 % 1.3 % Retail 3.7 % 3.9 % 4.2 % 3.3 % 3.3 % Retail CPGA $242 $259 $288 $295 $295 Capital expenditures  $23MM   $23MM   $17MM   $130MM   $130MM  Domestic 4G covered POPS  132MM   132MM   133MM   126MM   126MM  Cash, cash equivalents and investments  $1,433MM   $1,108MM  $711MM $1,245MM $1,245MM             (1) Pro forma revenue includes the impact of approximately $16.1 million of wholesale revenue related to Q1 2011 that was recorded in Q2 2011. (2) Includes non-launched markets. Based on the terms of the November 2011 Amended MVNO Agreement between Clearwire and Sprint, which provides for unlimited WiMAX service to Sprint retail customers in exchange for fixed payments in 2012 and 2013, fluctuations in the wholesale subscriber base will not necessarily correlate to wholesale revenue.Management Webcast Clearwire executives will host a conference call and simultaneous webcast to discuss the company's first quarter 2012 financial results at 4:15 p.m. Eastern Time today. A live broadcast of the conference call will be available online on the company's investor relations website located at http://investors.clearwire.com. Interested parties can access the conference call by dialing 1- 877-392-9886, or from outside the U.S. by dialing 1-707-287-9329, at least five minutes prior to the start time. A replay of the call will be available beginning at approximately 7:15 p.m. Eastern Time on April 26, through Thursday, May 3, by calling 1-855-859-2056, or from outside the U.S. by dialing 1-404-537-3406. The passcode for the replay is 68595416.About Clearwire Clearwire Corporation (Nasdaq:CLWR), through its operating subsidiaries, is a leading provider of 4G wireless broadband services offering services in areas of the U.S. where more than 130 million people live. The company holds the deepest portfolio of wireless spectrum available for data services in the U.S. Clearwire serves retail customers through its own CLEAR® brand as well as through wholesale relationships with some of the leading companies in the retail, technology and telecommunications industries, including Sprint and NetZero. The company is constructing a next-generation 4G LTE Advanced-ready network to address the capacity needs of the market, and is also working closely with the Global TDD-LTE Initiative and China Mobile to further the TDD-LTE ecosystem. Clearwire is headquartered in Bellevue, Wash. Additional information is available at http://www.clearwire.com.Forward-Looking Statements This release, and other written and oral statements made by Clearwire from time to time, contain forward-looking statements which are based on management's current expectations and beliefs, as well as on a number of assumptions concerning future events made with information that is currently available. Forward-looking statements may include, without limitation, management's expectations regarding future financial and operating performance and financial condition; proposed transactions; network development and market launch plans; strategic plans and objectives; industry conditions; the strength of the balance sheet; and liquidity and financing needs. The words "will," "would," "may," "should," "estimate," "project," "forecast," "intend," "expect," "believe," "target," "designed," "plan" and similar expressions are intended to identify forward-looking statements. Readers are cautioned not to put undue reliance on such forward-looking statements, which are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside of Clearwire's control, which could cause actual results to differ materially and adversely from such statements. Some factors that could cause actual results to differ are: We have a history of operating losses and we expect to continue to realize significant net losses for the foreseeable future. If our business fails to perform as we expect or if we incur unforeseen expenses in the near term, we may require additional capital to fund our current business. Also, we will need substantial additional capital over the long-term. Such additional capital may not be available on acceptable terms or at all. If we fail to obtain additional capital, our business prospects, financial condition and results of operations will likely be materially and adversely affected, and we will be forced to consider all available alternatives. Our current plans and projections are based on a number of assumptions about our future performance, which may prove to be inaccurate, such as our ability to substantially expand our wholesale business and the expected timing and costs of deploying LTE on our wireless broadband network. Our business has become increasingly dependent on our wholesale partners, and Sprint in particular. If we do not receive the amount of revenues we expect from existing wholesale partners or if we are unable to enter into new agreements with additional wholesale partners for significant new wholesale commitments, our business prospects, results of operations and financial condition could be adversely affected, or we could be forced to consider all available alternatives. We regularly evaluate our plans, and we may elect to pursue new or alternative strategies which we believe would be beneficial to our business, including among other things, expanding our network coverage to new markets, augmenting our network coverage in existing markets, changing our sales and marketing strategy and/or acquiring additional spectrum. Such modifications to our plans could significantly change our capital requirements. We plan to deploy LTE on our wireless broadband network, alongside mobile WiMAX, and we will incur significant costs to deploy such technology. Additionally, LTE technology, or other alternative technologies that we may consider, may not perform as we expect on our network and deploying such technologies would result in additional risks to the company, including uncertainty regarding our ability to successfully add a new technology to our current network and to operate dual technology networks without disruptions to customer service, as well as our ability to generate new wholesale customers for the new network. We currently depend on our commercial partners to develop and deliver the equipment for our legacy and mobile WiMAX networks, and will be dependent on commercial partners to deliver equipment and devices for our planned LTE network as well. Many of our competitors for our retail business are better established and have significantly greater resources, and may subsidize their competitive offerings with other products and services. Our substantial indebtedness and restrictive debt covenants could limit our financing options and liquidity position and may limit our ability to grow our business. Sprint owns just less than a majority of our common shares, is our largest shareholder, and has the contractual ability to obtain enough shares to hold the majority voting interest in the company, and Sprint may have, or may develop in the future, interests that may diverge from other stockholders. Future sales of large blocks of our common stock may adversely impact our stock price. For a more detailed description of the factors that could cause such a difference, please refer to Clearwire's filings with the Securities and Exchange Commission, including the information under the heading "Risk Factors" in our Annual Report on Form 10-K filed on February 16, 2012, and subsequent Form 10-Q filings. Clearwire assumes no obligation to update or supplement such forward-looking statements.CLEARWIRE CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(In thousands, except par value)(Unaudited)        March 31, 2012December 31, 2011 ASSETS     Current assets:     Cash and cash equivalents  $ 310,134  $ 891,929 Short-term investments  1,122,374  215,655 Restricted cash  2,178  1,000 Accounts receivable, net of allowance of $4,647 and $5,542  125,587  83,660 Inventory, net  18,241  23,832 Prepaids and other assets  75,968  71,083 Total current assets  1,654,482  1,287,159 Property, plant and equipment, net  2,720,040  3,014,277 Restricted cash  7,286  7,619 Spectrum licenses, net  4,281,208  4,298,254 Other intangible assets, net  36,792  40,850 Other assets  162,979  157,797 Assets of discontinued operations  29,022  36,696 Total assets  $ 8,891,809  $ 8,842,652       LIABILITIES AND STOCKHOLDERS' EQUITY     Current liabilities:     Accounts payable and accrued expenses  $ 269,904  $ 157,172 Other current liabilities  207,807  122,756 Total current liabilities  477,711  279,928 Long-term debt, net  4,243,426  4,019,605 Deferred tax liabilities, net  139,640  152,182 Other long-term liabilities  832,567  719,703 Liabilities of discontinued operations  24,907  25,196 Total liabilities  5,718,251  5,196,614       Stockholders' equity:     Class A Common Stock, par value $0.0001, 2,000,000 shares authorized; 492,524 and 452,215 shares outstanding  49  45 Class B common stock, par value $0.0001, 1,400,000 shares authorized; 839,703 shares outstanding  83  83 Additional paid-in capital  2,811,007  2,714,634 Accumulated other comprehensive income  1,971  2,793 Accumulated deficit  (1,799,649)  (1,617,826) Total Clearwire Corporation stockholders' equity  1,013,461  1,099,729 Non-controlling interests  2,160,097  2,546,309 Total stockholders' equity  3,173,558  3,646,038 Total liabilities and stockholders' equity  $ 8,891,809  $ 8,842,652  CLEARWIRE CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share data)(Unaudited)  Three Months Ended  March 31,  2012 2011       Revenues  $ 322,639  $ 236,808 Operating expenses:     Cost of goods and services and network costs (exclusive of items shown separately below)  263,790  240,145 Selling, general and administrative expense  142,655  214,864 Depreciation and amortization  177,973  182,474 Spectrum lease expense  79,708  74,821 Loss from abandonment of network and other assets  80,400  171,862 Total operating expenses  744,526  884,166 Operating loss  (421,887)  (647,358) Other income (expense):     Interest income  264  840 Interest expense  (136,686)  (119,920) Loss on derivative instruments  (4,862)  (26,781) Other income (expense), net  (13,268)  290 Total other expense, net  (154,552)  (145,571) Loss from continuing operations before income taxes  (576,439)  (792,929) Income tax benefit (provision)  15,413  (231) Net loss from continuing operations  (561,026)  (793,160) Less: non-controlling interests in net loss from continuing operations of consolidated subsidiaries  378,972  576,283 Net loss from continuing operations attributable to Clearwire Corporation  (182,054)  (216,877) Net income (loss) from discontinued operations attributable to Clearwire Corporation  231  (10,078) Net loss attributable to Clearwire Corporation  $ (181,823)  $ (226,955)       Net loss from continuing operations attributable to Clearwire Corporation per Class A common share:     Basic  $ (0.40)  $ (0.89) Diluted  $ (0.44)  $ (0.89)       Net loss attributable to Clearwire Corporation per Class A common share:     Basic  $ (0.40)  $ (0.93) Diluted  $ (0.44)  $ (0.93)       Weighted average Class A common shares outstanding:     Basic  458,827  244,389 Diluted  1,298,530  244,389  CLEARWIRE CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)(Unaudited)  Three Months Ended March 31,  20122011 Cash flows from operating activities:     Net loss from continuing operations  $ (561,026)  $ (793,160) Adjustments to reconcile net loss to net cash used in operating activities:     Deferred income taxes  (15,863)  (63) Non-cash loss on derivative instruments  4,862  26,781 Accretion of discount on debt  10,188  10,613 Depreciation and amortization  177,973  182,474 Amortization of spectrum leases  14,216  13,633 Non-cash rent expense  46,382  56,250 Loss on property, plant and equipment  139,056  178,325 Other non-cash activities  18,696  6,611 Changes in assets and liabilities:     Inventory  5,070  1,376 Accounts receivable  (42,662)  (28,099) Prepaids and other assets  (11,198)  (4,760) Prepaid spectrum licenses  --   (2,521) Deferred revenue  154,246  3,688 Accounts payable and other liabilities  119,897  100,439 Net cash provided by (used in) operating activities of continuing operations  59,837  (248,413) Net cash provided by operating activities of discontinued operations  5,814  1,459 Net cash provided by (used in) operating activities  65,651  (246,954) Cash flows from investing activities:     Payments to acquire property, plant and equipment  (21,867)  (271,244) Purchases of available-for-sale investments  (1,022,287)  (786,777) Disposition of available-for-sale investments  117,953  244,822 Other investing activities  (845)  14,005 Net cash used in investing activities of continuing operations  (927,046)  (799,194) Net cash provided by (used in) investing activities of discontinued operations  59  (3,034) Net cash used in investing activities  (926,987)  (802,228) Cash flows from financing activities:     Principal payments on long-term debt  (6,295)  (1,103) Proceeds from issuance of long-term debt  300,000  --  Debt financing fees  (6,205)  (1,148) Proceeds from issuance of common stock  --   1,322 Net cash provided by (used in) financing activities of continuing operations  287,500  (929) Net cash provided by financing activities of discontinued operations  --   --  Net cash provided by (used in) financing activities  287,500  (929) Effect of foreign currency exchange rates on cash and cash equivalents  (2,269)  227 Net (decrease) increase in cash and cash equivalents  (576,105)  (1,049,884) Cash and cash equivalents:     Beginning of period  893,744  1,233,562 End of period  317,639  183,678 Less: cash and cash equivalents of discontinued operations at end of period  7,505  1,745 Cash and cash equivalent of continuing operations at end of period  $ 310,134  $ 181,933Definitions of Terms and Reconciliations of Non-GAAP Financial Measures to Unaudited Condensed Consolidated Statements of Operations The company utilizes certain non-GAAP financial measures which are widely used in the telecommunications industry and are not calculated based on accounting principles generally accepted in the United States of America (GAAP). Other companies may calculate these measures differently.(1) Adjusted EBITDA is a non-GAAP financial measure. Adjusted EBITDA is defined as consolidated operating loss less depreciation and amortization expenses, non-cash expenses related to operating leases (towers, spectrum leases and buildings), stock-based compensation expense, loss from abandonment of network and other assets, charges for differences between recorded amounts and the results of physical counts, and charges for excessive and obsolete network equipment and CPE inventory. A reconciliation of operating loss to Adjusted EBITDA is as follows:    Three months ended  (Unaudited)  ActualPro formaActual  March 31,December 31,September 30,March 31,March 31,  20122011201120112011 (in thousands)           Operating loss  $ (421,887)  $ (433,149)  $ (399,136)  $ (631,279)  $ (647,358)             Non-cash expenses:           Spectrum lease expense  36,415  37,228  38,845  34,748  34,748 Building and network related rents*  24,183  113,612  70,584  35,135  35,135 Stock compensation and other*  6,066  5,468  9,892  6,360  6,360 Non-cash expenses  66,664  156,308  119,321  76,243  76,243             Non-cash write-downs:           Loss from abandonment of network and other assets  80,400  123,000  29,129  171,862  171,862 Network equipment reserves and other write-downs*  58,656  6,358  38,681  6,463  6,463 Non-cash write-downs  139,056  129,358  67,810  178,325  178,325             Depreciation and amortization  177,973  169,962  165,560  182,474  182,474             Adjusted EBITDA  $ (38,194)  $ 22,479  $ (46,445)  $ (194,237)  $ (210,316)             *Amounts included in COGS and SG&A.         In a capital-intensive industry, management believes Adjusted EBITDA to be a meaningful measure of the company's operating performance. The company provides this non-GAAP measure as a supplemental performance measure because management believes it facilitates comparisons of the company's operating performance from period to period and comparisons of the company's operating performance to that of other companies by backing out potential differences caused by non-cash expenses related to long-term leases, share-based compensation and non-cash write-downs. Because this non-GAAP measure facilitates internal comparisons of the company's historical operating performance, management also uses this non-GAAP measure for business planning purposes and in measuring the company's performance relative to that of its competitors. In addition, Clearwire believes that Adjusted EBITDA and similar measures are widely used by investors, financial analysts and credit rating agencies as a measure of the company's financial performance over time and to compare the company's financial performance with that of other companies in the industry.(2) Retail ARPU (Average Revenue Per User) is retail revenue less wholesale revenue, the revenue generated from the sales of devices, shipping revenue, and other revenue; divided by the weighted average number of retail subscribers in the period, divided by the number of months in the period.   Management uses ARPU to identify average revenue per customer, to track changes in average customer revenues over time, to help evaluate how changes in the business, including changes in the company's service offerings and fees, affect average revenue per customer, and to assist in forecasting future service revenue. In addition, ARPU provides management with a useful measure to compare the company's customer revenue to that of other wireless communications providers. The company believes investors use ARPU primarily as a tool to track changes in the company's average revenue per customer and to compare Clearwire's per customer service revenues to those of other wireless communications providers.  Three months ended  (unaudited)  March 31,December 31,September 30,March 31,  2012201120112011 (in thousands)         Retail ARPU         Total revenues  $ 322,639  $ 361,870  $ 332,177  $ 236,808 Wholesale revenue  (117,821)  (164,082)  (137,162)  (60,895) Device and other revenue  (20,718)  (14,540)  (10,797)  (10,830) Retail ARPU revenue  184,100  183,248  184,218  165,083           Average retail customers  1,310  1,308  1,305  1,176 Months in period  3  3  3  3 Retail ARPU  $ 46.83  $ 46.69  $ 47.05  $ 46.80(3) Pro Forma Reconciliation The unaudited pro forma condensed consolidated statements of operations that follow are presented for informational purposes only and should not be taken as representative of the future consolidated results of operations of the company. Management believes the unaudited pro forma condensed consolidated statements of operations are useful because they more accurately reflect the revenue-generating activities during the relevant periods and facilitate period to period comparisons of the company's operating performance. The following unaudited pro forma condensed consolidated statements of operations for the three months ended March 31, 2011 were prepared using the unaudited condensed consolidated statement of operations of Clearwire for the three months ended March 31, 2011. The unaudited pro forma condensed consolidated statement of operations should be read in conjunction with the separate historical financial statements and accompanying notes thereto. The pricing provisions agreed to in the Sprint wholesale agreements signed on April 18, 2011 were applicable as of January 1, 2011. However, in accordance with GAAP applicable to revenue recognition, Clearwire's first quarter 2011 results did not reflect additional revenues due to the company as a result of the amendments contained in the Sprint wholesale amendments being signed subsequent to the end of the period. As such, during second quarter 2011, Clearwire recognized revenue of approximately $16.1 million attributable to services provided in first quarter 2011. Had the Sprint wholesale amendments been in effect as of March 31, 2011, and the portion of the settlement related to prior periods been recorded in the attributable service periods, Clearwire's pro forma revenues for first quarter 2011 would have increased by $16.1 million and the pro forma net loss from continuing operations attributable to Clearwire Corporation would have decreased by $4.0 million or $0.02 per basic share. The following table reconciles as reported results to the pro forma results for the three months ended March 31, 2011 (in thousands):  Three Months Ended March 31, 2011  (Unaudited)  Amounts as reportedAdjustments (1)Pro forma amounts Revenues:       Retail revenue  $ 175,241  --   $ 175,241 Wholesale revenue  60,895  16,079  76,974 Other revenue  672    672 Total revenues  236,808  16,079  252,887 Total expenses  (1,029,968)    (1,029,968) Net loss from continuing operations  (793,160)  16,079  (777,081) Less: non-controlling interests in net loss from continuing operations of consolidated subsidiaries  576,283  (12,087)  564,196 Net loss from continuing operations attributable to Clearwire Corporation  (216,877)  3,992  (212,885) Net loss from discontinued operations attributable to Clearwire Corporation  (10,078)  --   (10,078) Net loss attributable to Clearwire Corporation  $ (226,955)  $ 3,992  $ (222,963)         Net loss from continuing operations attributable to Clearwire Corporation per Class A Common Share:       Basic  $ (0.89)    $ (0.87) Diluted  $ (0.89)    $ (0.87)         Net loss attributable to Clearwire Corporation per Class A Common Share:       Basic  $ (0.93)    $ (0.91) Diluted  $ (0.93)    $ (0.91)                 (1) Pro forma revenue includes the impact of approximately $16.1 million of wholesale revenue related to Q1 2011 that was recorded in Q2 2011.      (4) Churn, which measures customer turnover, is calculated as the number of subscribers that terminate service in a given month divided by the average number of subscribers in that month using the actual number of subscribers. Subscribers that discontinue service in the first 30 days of service for any reason, or in the first 90 days of service under certain circumstances, are deducted from the company's gross customer additions and therefore not included in any of the churn calculations. Wholesale churn is calculated as the wholesale subscriber deactivations during the reporting period divided by the weighted average wholesale subscriber base for the period divided by the number of months in the period. Retail churn is calculated as the retail subscriber deactivations during the reporting period divided by the weighted average retail subscriber base for the period divided by the number of months in the period. Management uses churn to measure retention of the company's subscribers, to measure changes in customer retention over time, and to help evaluate how changes in the business affect customer retention. The company believes investors use churn primarily as a tool to track changes in the company's customer retention. Other companies may calculate this measure differently.(5) Retail CPGA (Cost per Gross Addition) is selling, general and administrative costs, less general and administrative costs and acquired businesses costs (costs from entities that were acquired by Clearwire's predecessor entity) plus devices equipment subsidy, divided by gross retail customer additions in the period.  Three months ended  (Unaudited)  March 31,December 31,September 30,March 31,  2012201120112011(in thousands)         Retail CPGA         Selling, general and administrative  $ 142,655  $ 128,502  $ 176,469  $ 214,864 G&A and other  (95,143)  (96,469)  (118,923)  (136,105) Total selling expense  47,512  32,033  57,546  78,759           Total gross adds  196  124  200  267 Total retail CPGA  $ 242  $ 259  $ 288  $ 295 Management uses retail CPGA to measure the efficiency of the company's customer acquisition efforts, to track changes in Clearwire's average cost of acquiring new subscribers over time, and to help evaluate how changes in the company's sales and distribution strategies affect the cost-efficiency of the company's customer acquisition efforts. Clearwire believes investors use retail CPGA primarily as a tool to track changes in the company's average cost of acquiring new subscribers.CONTACT: Investor Relations: Alice Ryder, 425-636-5828 alice.ryder@clearwire.com Media Relations: Susan Johnston, 425-216-7913 susan.johnston@clearwire.com JLM Partners for Clearwire: Mike DiGioia or Jeremy Pemble, 206-381-3600 mike@jlmpartners.com or jeremy@jlmpartners.com